Sonic Automotive Announces EchoPark’s Plans to Address Current Pre-Owned Market Volatility
22 Junio 2023 - 3:15PM
Business Wire
Focus on Key Markets Expected to Enhance
Near-Term Performance While Maintaining Long-Term Strategic
Plan
Sonic Automotive, Inc. (“Sonic’’ or the “Company”) (NYSE:SAH), a
Fortune 500 Company and one of the nation’s largest automotive
retailers, today announced the implementation of its plans to align
the EchoPark brand with current pre-owned market conditions that
are being negatively impacted by lower production of new vehicles
over the past three years and historically low lease penetration
and lease returns, resulting in lower availability of used vehicles
and higher wholesale prices with unpredictable volatility.
In accordance with this plan, Sonic has indefinitely suspended
operations at eight EchoPark locations and additional related
Delivery/Buy Centers which will enable Sonic to allocate more
vehicles to key markets and increase capacity to address current
demand in those markets. The enhancement of inventory mix at the
remaining EchoPark stores, coupled with expense reductions from
this action, are expected to improve EchoPark’s short-term
financial performance while maintaining the foundation for the
brand’s national expansion and its continuation of providing the
best guest experience in automotive retail.
Sonic has positioned EchoPark to quickly adjust as market
conditions change. Recent data shows improvement in pre-owned
wholesale pricing but Sonic expects continued volatility in the
wholesale price environment into 2024. Improvements in wholesale
pricing will benefit consumer affordability as well as the overall
profitability of the EchoPark model. Additionally, expected new
vehicle production increases over the next 12-18 months will
benefit pre-owned availability and further improve both consumer
affordability and EchoPark profitability. These improvements in
market conditions will enable Sonic to continue the expansion of
EchoPark’s geographic footprint into new markets.
Sonic maintains the goal of EBITDA breakeven for the EchoPark
segment by the first quarter of 2024. Sonic also maintains the goal
of reaching 90% of the U.S. population with EchoPark, which was
previously communicated to be achieved by 2025. Sonic now believes
that the timing of achieving this goal will be predicated on how
quickly the pre-owned market normalizes related to inventory
availability and pricing. Currently, Sonic’s focus is on improving
EchoPark’s financial performance.
In conjunction with these plans, Sonic expects to record a
one-time charge in the second quarter of 2023, ranging between $60
million to $80 million, all of which is non-cash except $3 million
to $5 million. Additional details on this one-time charge and
expected EBITDA impact of these actions will be discussed on our
upcoming quarterly earnings call.
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 500 company based in
Charlotte, North Carolina, is on a quest to become the most
valuable automotive retailer and service brand in America. Our
Company culture thrives on creating, innovating, and providing
industry-leading guest experiences, driven by strategic investments
in technology, teammates, and ideas that ultimately fulfill
ownership dreams, enrich lives, and deliver happiness to our guests
and teammates. As one of the largest automotive retailers in
America, we are committed to delivering on this goal while pursuing
expansive growth and taking progressive measures to be the leader
in this category. Our new platforms, programs, and people are set
to drive the next generation of automotive experiences. More
information about Sonic Automotive can be found at
www.sonicautomotive.com and ir.sonicautomotive.com.
Forward-Looking
Statements
Statements included in this press release may constitute
“forward-looking statements” under federal securities laws. All
statements other than statements of present or historical fact,
that address activities that we believe, expect or anticipate will
or may occur in the future are forward-looking statements. There
are many factors that affect management’s views about future events
and trends of the Company’s business. These factors involve risks
and uncertainties that could cause actual results or trends to
differ materially from management’s views, including, without
limitation, economic conditions in the markets in which we operate,
new and used vehicle industry sales volume, anticipated future
growth in our EchoPark Segment, the success of our operational
strategies, the rate and timing of overall economic expansion or
contraction, , and the risk factors described in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2022 and
other reports and information filed with the Securities and
Exchange Commission (the “SEC”). The Company does not undertake any
obligation to update forward-looking information, except as
required under federal securities laws and the rules and
regulations of the SEC.
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version on businesswire.com: https://www.businesswire.com/news/home/20230622072742/en/
Sonic Automotive Investor Inquiries Heath Byrd, Executive
Vice President and Chief Financial Officer Danny Wieland, Vice
President, Investor Relations ir@sonicautomotive.com
Sonic Automotive Press Inquiries Sonic Automotive Media
Relations media.relations@sonicautomotive.com
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